After reading my post on the emergence of The Second Machine Age and what it holds for the world of transportation, my boss responded, “I still prefer a clutch and a gear stick!”And if the comments I received from many of you are any indication, you may feel similarly. However, you also told me you are excited about the changes that lie ahead, not just for transportation, but also for other industries. This made me think about retail and healthcare, and how these industries are transforming as we speak.In this blog, I’m focused on the impact of the Second Machine Age on retail, and am saving healthcare for a future post. Fascinating? You bet!In the world of retail, while we’re already feeling the effects of the transformation from “bricks-to-clicks,” let’s fast forward a few chapters and see where we’re headed.It’s fair to say that if Amazon isn’t the largest retailer, it’s pretty close. Perhaps its success lies with how simple they’ve made purchasing or how good they’ve made overall online experience, but where I think they master—and what is catalyzing changes—is the following:“People want to buy what they want, not what stores want to sell them.”This is the fundamental shift that’s taking place. This is what all retailers have to grasp.I recently drove past a major electronics store in Silicon Valley where they boasted “Internet Price Match” on a massive billboard. So, what does this sign tell us? Perhaps that the store’s prices are a little higher than those of competitors… that when we visit this store and find an item that might meet our needs, we’ll have to Google the item and then price wrangle to get the item discounted? Of course, this assumes the item is the one we’re really looking for; the one we would normally buy, but it’s there and available.Why bother stopping at all if we know we’ll have to go through all this to make a purchase? Why not search for the item online, purchase what we really want and use next day delivery? Or, if we need it faster than that, pay for local pickup so we get what we want? No compromises.The days of brick-and-mortar retailers are numbered. Most retailers understand this paradigm shift is occurring, but many still have systems that are geared around “their inventories,” not the premise of buying anything and blending the physical and online worlds. Therefore, it’s likely that the demise of many retailers will be squarely based on the systems and processes they have in place, not their financials.So, what wouldn’t we purchase online? What incites us to get up from our sofa and head to a shop versus our smart phone or iPad? When asked, most people say one of two things: What it was like to purchase goods and take them with youThat Walmart once employed nearly as many people as the U.S. Armed ForcesWhat “Black Friday” wasWhat a store credit card wasWhat it was like to be shopping pack horses at holiday sales The first is self-explanatory. The second speaks to our need to see and touch some items before we purchase them. Something we can’t do online… at least right now.No amount of reviews can tell you what a rug feels like under your feet or the aesthetic effect a floor lamp will have on your eyes, etc. I watch my wife shop for clothes (yes, I have plenty of practice), and she looks then touches jeans, jumpers and shirts.So, what’s the next evolution of retail?Think the Amazon Mall, a normal, physical mall with restaurants, coffee shops, ice cream parlors, etc. However, in this mall, all the shops are showcases owned by Amazon.These seasonal/regionally-specific showcases allow shoppers to see and touch items, try things on, and make purchases, but with one important difference: Shoppers don’t walk away with the goods. They have their purchases delivered without the hassle of in-store shopping… without the burden of retail bags… without feeling like a shopping packhorse.These showcases allow people to buy what they want, not what the stores want to sell them. They allow people to see and touch items before they buy them.It’s simple, really. Retailers carry just enough inventories to close the sale and they leverage proven distribution networks (i.e., Amazon) to deliver the goods to shoppers.With this evolution, the last remaining stigma for online shopping is removed.So, imagine if you were a retailer with this tsunami wave coming, do you retract to a channel on Amazon, do you build your own website, or do you specialize?I can’t see the boutique stores and art galleries in places like Carmel By The Sea going away, but it is going to mean a massive shift for most retailers.What makes this transformation of retail possible are the same things that I discussed in the Transportation post: making sense of the “Small Data Sprawl,” correlation, aggregation, contextualization of data, etc., and, in this particular case, a healthy dose of locational information to match shopping trends with predictive purchasing.Here again, security and data protection will be paramount. We’ll be faced with making more privacy tradeoffs (e.g., resulting from location services) for convenience while exponentially increasing our digital footprint.No, folks, this isn’t rocket science. It’s not visionary. It’s just obvious. It’s a far cry from the corner shop depicted in the British sitcom “Open All Hours,” but it’s just around our corner. So, welcome to shopping in the Second Machine Age! Things like groceries aren’t widely available yet (particularly, fresh fruits and vegetables).They like the experience of the “tactile” purchase.
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